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The Fallacy of the Free Market and the Extinction of the Legacy Farmer

The Fallacy of the Free Market and the Extinction of the Legacy Farmer

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Our small, legacy farmers are facing an existential crisis today.  And in response to that crisis, we are being told by elected officials, economists, investors, and others that “we must let the free market take its (inevitable) course in the new cannabis marketplace.”  But actually, the closest thing we have ever had to a “free market” was the unregulated traditional cannabis industry.

In Mendocino county, we had a history of setting cultivation size limits that were smaller than the other Emerald Triangle counties.  For decades, the market was dominated by small family businesses working together in a cooperative, circular economy.  Working together, we rose together and our communities benefited. Then, over time, Individuals started to run bigger operations that used more extractive business principles, which led to environmental degradation, price fixing, vertical control of the supply chain, and lower wages for employees.  The larger operators did not seem to worry about enforcement or being in the spotlight. They were not invested in their communities. Their goal was to extract and leave. Whereas the small family farmer lived on their farms.  We stayed small because we did not want child protective services taking our children. We did not want to be arrested and discriminated against at work or in our place of business.  So, we stayed out of the spotlight while the larger extractive businesses took center stage. These large operators started to give the cannabis community a bad name.

Then in 2016, the California voters legalized cannabis. During this legalization process, legacy operators were given a couple of years to make the transition from the Traditional Market to the Regulated Market.  During this time of transition the legacy farmers were unable to operate in a functional system.  It was simple for the large farms to spring up in agricultural communities around the state.  They would bend the rules in regard to the previous cultivation requirements and they would stack licenses to amass huge farms.

The legacy farmers that cultivated for decades, with good environmentally sound practices, were not given a functional system into which we could transition.  After investing many years and substantial resources, farmers were informed that we couldn’t meet the requirements of a failed system — even after we invested all this time and money in good faith to become licensed farmers.

We were told the answer to this “system failure” was to rely on the benefits of a “free market”. This “answer” was an immediate red flag.  As farmers, we are fully versed in the use of the words “free market.”  We watched large operators take over the U.S. family farms in the name of the free market that requires a scale to size approach to achieve success.  Family farms were bought out and consolidated into huge farms.  But even many of these failed when crop prices fell and shareholders’ profits decreased.  Because they were deemed too big to fail, they were bailed out by the taxpayer to the tune of billions of federal dollars in relief.  Government claimed it could not bail out the family farms but it had plenty of bailout funds for large agribusiness.  We also watched as the term “free market” was used to give banking a leg up so they could reap the benefits of producing financial by-products as happened in the savings and loans sector.  The Glass Steagall Act, signed in Depression-era 1933 to separate commercial banking from investment banking, was repealed in 1999 because it was seen as being too restrictive for banks and businesses.  This contributed to the 2008 recession.

The term free market is a fallacy.  It is used to deceive us. We have a regulatory system that favors large businesses and is a burden on the small businesses in California. This is not a simple oversight. Big business is at the table when regulations are being drafted. This is why we are seeing many small businesses leave the state.

So today we have legacy farmers who are willing to subsidize this new industry by using their own land.  We want to run small farms that spread the workload around the county. We would rather have 1,000 cannabis CEOs living in Mendocino county than 10 CEOs living outside of the county. The large companies want to cash in on the brand the legacy farmer established. The large farms want to use the brand as a resource to be extracted. The legacy farmers want to offer year-round employment while the  large farms prefer to hire a migrant workforce. The migrant workforce is easier to use because the labor is cheaper.  There are no wage and working condition regulations that apply to transient workers; no labor unions to protect these workers. The obligation to pay a living wage is removed from the employer.

Small farms are better for the environment.  Presently cannabis farms are repairing the damage done by the logging industry.  A small farm can fit into and become a benefit to the ecosystem; not so with large mono crops.  Small farms can change course quickly which makes an environment ripe for innovation. They will out produce large farms in quality and productivity in output per acre. They will pose less of a burden on housing because they spread the workforce throughout the rural community. Many offer on-site housing which is a huge financial boost to the employee.  Worldwide, 75% of food is produced on small family farms. It is only in wealthy countries you see the failed model of large agriculture where 1% of the farmers, or large corporations, own the majority of the land.

There is blame to go around to all players in this transition. From the farmer to the county to the state and all the agencies in between. But we are at a crossroads. We have rules in place that are going to trigger an extinction event for the legacy farmer.  Fortunately, we have many pieces of legalization coming down the pipeline to help the small farmer.  We have elected officials advocating for the legacy farmer.  But will it be in time?  I am not here to say there is no place for large farms.  I am here to say we have not designed a system that is inclusive for small farms.  We are working under regulations that were designed to regulate large farms that have proven to be a failed model.  I am here to say do not use the term “free trade” as the reasoning behind excluding the legacy farmer from the new cannabis industry.  Large agriculture is predominantly a failed model.  Small farmers are the future.

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David King is a Mendocino county, redwood coastal range, living soil cannabis farmer.

Editor: Jude Thilman serves as Vice-Chair of MCA and is owner of Dragonfly Wellness Center, a medically-focused dispensary on the Mendocino Coast, between Fort Bragg and Mendocino Village.

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